Referent power is based on a potential leader's charm, courage, or some other trait which induces admiration or respect in his followers. Referent power is very similar to what Max Weber described as charismatic authority. 28. 29. MANAGEMENT BY OBJECTIVES – participative style of management.  In MBO, managers and employees establish objectives together. The employee gets a number of goals to achieve, and his performance rating depends on to what extent these goals were accomplished.  Responsibility is assigned during operational planning. It is during operational planning, or action planning, that responsibility to accomplish certain objectives is assigned. This is known as Management by Objectives, and was described by Peter Drucker, who came up with the eight Key Results Areas. In MBO, management does not necessarily tell the employee exactly what to do, just what to accomplish. 30. 31. Peter Drucker  Defined both MBO and eight Key Results Areas, which every business organization should define goals for. Peter Drucker defined eight Key Results Areas--market share, productivity, profitability, innovation, resources, worker performance, manager performance, and social responsibility.  Profitability , one of the eight Key Results Areas, is the benefit resulting from an activity. Peter Drucker defined eight Key Results Areas--market share, productivity, profitability, innovation, resources, worker performance, manager performance, and social responsibility.

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 Innovation , one of the eight Key Results Areas defined by Peter Drucker, is the development of new products and services. 32. 33. EXPECTANCY THEORY (Victor Vroom/ Yetton) – employee motivated to high effort when:  expectancy – belief it can be done (confidence)  instrumentality – likelihood of receiving outcomes (link to rewards)  valence – nature of outcomes received (praise, promotion, bonus)  The Expectancy Theory states that a person's motivation is based on three factors--how likely he believes his effort will lead to the desired performance, if he believes his effort will lead to a greater reward, and how much value he places in this reward. This is known as the Expectancy Theory, and defines motivation as equal to the product of Expectancy, Instrumentality, and Valence--Motivation Forces = Expectancy x Instrumentality x Valence. Basically, the worker has to believe he can achieve the goals, expect that achieving the goals will give him a reward, and value that reward.  The expectancy theory of motivation can be seen as the "what's in it for me" view of behavior. The expectancy theory states that employees determine in advance what the outcomes will be and whether alternate possible outcomes are preferable. According to this theory, employees base their motivation on 3 questions: 1) Will their efforts likely be effective? 2) Will being effective bring good outcomes for them? 3) Are these good outcomes sufficiently attractive?  This model is prescriptive in nature and includes 5 decision

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